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In the loop 26 September 2024

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is stronger this morning, at R17.19/$, after closing stronger yesterday (R17.27/$*).
  • EM currencies were mixed yesterday; the RUB (+0.9%), MYR (+0.7%) and PHP (+0.7%) were the biggest gainers; the MXN (-1.1%), COP (-1.1%) and CZK (-0.5%) were the biggest losers.
  • Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.
 
  • Central bank watch: the Swiss National Bank (SNB) is likely to trim its benchmark interest rate by 25 bps today. 
  • The SNB has already cut its benchmark interest rate by 50 bps to date.
  • This has now been matched by two 25 bps cuts by the ECB and the Fed’s big move last week.
  • The SNB is likely to downwardly revise its inflation forecast after readings for July and August came in lower than expected.
 
  • Fed Governor Adriana Kugler commented yesterday that she “strongly supported” the Fed’s decision to cut rates by 50 bps last week. 
  • Kugler added that it would be appropriate to cut rates further if inflation continued to ease as expected. 
  • However, the central bank needs to pay close attention to the employment side of its mandate as well.
  • Fed Chair Jerome Powell commented after the meeting last week that the bigger cut was intended to protect the labour market as hiring slowed and price pressures eased. 
 
  • Several ECB policymakers, including ECB President Christine Lagarde, are due to speak on the economy and the interest rate cutting cycle today.
  • Fed Chair Jerome Powell is also due to speak today.
  • Investors will keep an eye out for guidance on the speed and magnitude of the interest rate cutting cycles.
 
  • The US Q2:24 GDP (third estimate) is expected to come in at 2.9% q/q in Q2:24, from 3.0% q/q previously.
  • The US GDP report will incorporate updates to annual and quarterly statistics from 2019 through to Q1:24.
  • Durable goods orders for August are expected to have fallen by 2.7% m/m in August, following a 9.8% m/m increase in July.
  • Durable goods excluding transportation likely improved slightly in August.
 
  • Locally, the August PPI is on the cards today and is expected at 3.5% y/y, from 4.2% y/y in July.
  • On a m/m basis, PPI is likely to have increased by 0.3% in August, after declining by 0.2% in July. 
  • The Q2:24 non-farm payrolls are also due out today; payrolls decreased by 0.6% q/q in Q1:24.
 
  • Brent crude is down this morning, and down by 5.5% year-to-date.
  • The gold price is up this morning, and up by 29.1% year-to-date.
 
  • Brent crude oil is currently at $72.81/bbl; ($73.46/bbl*).
  • Gold is at $2662/oz ($2653/oz*).
  • SA CDS 182bps*, Brazil 155bps* and Turkey 271bps*.
  • Yields: US 10yr at 3.78%*, German bund at 2.17%*, SA 10-year generic at 9.99%*, SA’s R2035 at 10.08%*.
 

* Denotes yesterday’s close. 

Key events and data:

  • 10h00: Eurozone M3 money supply (August), ECB publishes Economic Bulletin
  • 11h30: SA PPI (August), non-farm payrolls (Q2:24)
  • 14h30: US GDP (Q2:24 – third estimate), durable goods orders (August), initial jobless claims (21 September)
 

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